Interest Rates (exciting, eh?)

The Australian Fed opted to postpone any additional interest rate hikes this morning (after a 0.25% increase last month) at the request of everyone in Australia. Interest rates here have been creaping up in an attempt to hold off inflationary pressures (primarily oil). Yet there are signs that the Australian economy, which has been chugging along quite well for some time now, is showing signs of weakness. In particular the housing "bubble" has burst. Those of you in the U.S. have heard songs sung by wise men in the hills about the future demise of the housing bubble, but the bubble lives on. Not so here. Housing prices in Sydney have already started to tumble and are projected to decline by 8% before hitting bottom. High-rise condo builders in Melbourne have started thinking that investing in several hundred units at a time may not have been the best idea. Australians haven't benefitted from a 1-2% interest rate like consumers in the U.S. - none of that 0 or -1% financing on new cars nonsense. For the past decade, the Fed interest rate has oscillated between 4.25 and 7.5% and currently stands at 5.5%. Concern about interest rate hikes and their effect on mortgage rates and consumer buying power has the real estate market spooked.